Profitable Trading: A Modern Guide to Strategy, Risk, and Emotion Management

By Niclas Hummel

Niclas Hummel, an experienced trader, reveals in this concise guide the realities of trading futures and cryptocurrencies. He illustrates how easily newcomers in the shark tank of financial markets can become shark bait when they operate without clear strategy, risk, and emotion management.

Don't be swayed by current trends on social media into making rash decisions. While trading always carries risks, it remains one of the most established methods of wealth accumulation when approached with time-tested strategies.

The book conveys how you can succeed in trading with thoughtful analysis, a well-founded trading plan, and the right actions and mental tricks. It is an essential guide for anyone looking to trade profitably in the dynamic world of global financial markets.

• Language: English
• Publisher: BoD - Books on Demand
• Release date: May 13, 2024
• ISBN: 9783759780225

Niclas Hummel

Mein Name ist Niclas Hummel, und ich bin seit 12 Jahren aktiv im Börsenhandel tätig. Meine Leidenschaft für das Trading habe ich schon früh entdeckt und es mir als Mission gemacht von den größten Spekulanten und Tradern dieser Welt zu lernen und die Märkte profitabel zu handeln. Der größte Lehrmeister war mir dabei der Markt selber. Heute ist der Börsenhandel mein profitabelster Vermögensaufbau und ich bringe Menschen meine Methode bei, bei der es vorallem auf eine sinnvolle Strategie, Risko- und Emotionsmanagement ankommt. Neben dem herkömmlichen Börsenhandendel hat mich auch die aufstrebende Welt der Kryptowährungen fasziniert. Seit 2015 verfolge ich die Entwicklung von Bitcoin und der damit verbundenen Blockchain Technologie. Die spannende Reise im Börsenhandel und in der Technologie hat mein Leben geprägt. Ich freue mich darauf, mein Wissen mit anderen zu teilen.

Book preview

Risk Disclaimer

Trading financial instruments such as futures, stocks, options, certificates, currencies, cryptocurrencies, and other investments involves substantial risks and may not be suitable for everyone. The trading strategies and techniques described in this book may not be suitable for every individual or situation. Past results do not guarantee future profits.

It is important to emphasize that trading in financial markets can potentially lead to losses, and you should only trade with capital you are willing to lose. You should be aware of all risks and seek independent financial advice before implementing the strategies described in the book.

The author and the publisher of this book do not assume any responsibility for any financial losses or other damages that may arise from trading or applying the information presented in the book. Each reader is responsible for their own trading decisions and should carefully consider their financial situation, risk tolerance, and investment objectives.

The content of this book is solely for educational purposes and does not constitute investment advice. It is your own responsibility to seek professional advice and carefully assess the risks before making trading decisions.

Please be aware that financial markets can be volatile, and market conditions can change rapidly. Always trade responsibly and with caution.

Before you commence trading, you should familiarize yourself with the applicable laws and regulations in your country and ensure that you possess all necessary licenses and permits.

A man who can both be right and sit tight is uncommon.

Jesse Livermore (1877-1940), stock trader and speculator

Table Of Contents

Risk Disclaimer

Table Of Contents

Foreword

Strategy

Selection Bias

The Market Selection

Laws and Taxes

The Expectancy

Risk-Reward Ratio

Macro Analysis

Costs

Which Timeframe?

Technical Analysis

Assembling the Puzzle Pieces

The Stoploss Distance

Trade Management

Full Automation

The Trading Plan

Risk Management

The Passive All-In Situation

Can you time the Market?

Available Capital

Value At Risk

The Compound Interest Effect

Expectation of Yourself

Risk Calculation

Account Building

Survival Measures

Correlations

Summary

Emotion Management

Anchoring Effect

The Rational Mode

Trading stress

The Risk Tolerance Factor

The Trading Demons

FOMO

The Search for the Holy Grail

Dealing with Losses

Identification

Greed & Fear as Communicative Partners

Doing nothing

Narrow Results

Really learning from Mistakes

You have to prove it to Yourself

Summary

Links

Contact

Glossary

Note: Basic trading terms and technical jargon appearing without explanation can be looked up in an alphabetically sorted glossary at the end of the book.

Foreword

The pursuit of profitable trading opportunities is of great interest to many people in today's world. Particularly, the realm of cryptocurrency trading is regarded as new and volatile.

The abundance of information about trading on social media platforms like YouTube, TikTok, and others often leads to confusion. Among this flood of information are also brokers who portray trading as particularly easy. The account opening process is quick and straightforward, aiming to generate fees from trading positions involving as many retail traders as possible. This also pleases quantitative traders, who seek to use your provided liquidity with advanced financial mathematics and technological advantages to take your money.

To avoid becoming part of the shark bait in the financial ocean, it is crucial that you engage with proven and contemporary trading methods. Otherwise, you will be exploited by professional traders and institutions.

With the buying and selling of any financial asset, you automatically become a trader who must manage risks, both financially and emotionally. In this process, three core components are essential: a solid strategy, effective risk management, and conscious emotion management. In my 12 years of experience as a trader, I have realized that each of these components is equally important. This guide will show you the considerations behind a successful trading plan, why taking inappropriate risks diminishes your chances of success, how a lack of emotion management inevitably leads to self-sabotage, and much more.

I promise you that with the practical principles and analysis methods presented here, you can swim alongside the wall street sharks. Profitable trading begins in the mind. It is time for you to take full responsibility for actively building your wealth and deeply understand the reality of the financial markets to make them work for you instead of working for them.

Niclas Hummel

Strategy

Concrete entry and exit signals are only a small part of strategic considerations. A good trading strategy must answer many questions. How can you predict the general direction of the market using statistics? How do you manage a profit and loss scenario? Other important topics include market selection, determining stoploss distances relative to holding time, and avoiding high costs. The specific insights will be written down in a final trading plan, which will be your personal sheriff for disciplined management in the wild west of financial markets.

Selection Bias

The selection bias describes an evaluation error that occurs in statistical data when the sample is not representative. The omission of relevant information when looking back at past stock prices for example leads to such a selection bias. The human brain is particularly susceptible to this bias. Overcoming this bias in looking at data is crucial in trading. This is the first important step in thinking towards a profitable trading strategy. Here are a few examples of selection bias:

An investment in Apple and Amazon after the Dotcom crash in 2001 would have made you very wealthy. However, the truth is that at that time, you could have also invested in hundreds of other tech companies that are now bankrupt.

● Bitcoin has skyrocketed to astronomical heights since February 9, 2011. But would you have trusted a magical internet currency back then or foreseen that it would be the subject of extreme speculation?

A trend-following strategy in stock indices worked very well from 2020 to